Which of the following is the correct expression for finding the present value of a $500 payment two years from today if the interest rate is 6 percent? A)$500/(1.06)² B)$500 − 500(1.06)² C)$500/(1.02)⁶ D)$500*(1.06)²

Question

Quizplus · Accepted Answer

The correct expression for finding the present value of a future payment involves dividing the future amount by the factor (1 + interest rate) raised to the power of the number of periods. Therefore, $500/(1.06)^2 is the correct expression, which matches option A.

Which of the Following Is the Correct Expression for Finding